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Article
Publication date: 5 December 2018

Bernard Boateng, Mauricio Silva and Claire Seaman

The purpose of this paper is to examine how a Ghanaian migrant family business in Kent makes financial decisions and measures business growth within the framework of Social…

Abstract

Purpose

The purpose of this paper is to examine how a Ghanaian migrant family business in Kent makes financial decisions and measures business growth within the framework of Social Network theory and focussing on influences such as family, cultural and social factors.

Design/methodology/approach

Case study: migrant Ghanaian family business owner in Kent, first generation who migrated to the UK after the year 2000. The business is a small and medium enterprise and running the business as a family.

Findings

The narrative highlights important aspects of cultural and social factors that are not usually considered in credit analysis or applications for a relationship with a mainstream financial services institution. It is also indicated that family and personal attributes and culture had the most social capital for the shop owner to use or explore in taking her financial decisions. The discussions provide a basic framework for future research.

Originality/value

There is a gap in the research of Ghanaian migrant family businesses in the UK, in particular of their financial decision making process.

Details

Journal of Family Business Management, vol. 9 no. 1
Type: Research Article
ISSN: 2043-6238

Keywords

Article
Publication date: 5 September 2017

Anna Motylska-Kuzma

The purpose of this paper is to examine the status, trends and potential future research areas in the field of financial decision-making process in family firms.

1841

Abstract

Purpose

The purpose of this paper is to examine the status, trends and potential future research areas in the field of financial decision-making process in family firms.

Design/methodology/approach

The bibliometric indicators and methods are applied in order to describe the publication activity and to analyze the contents of the articles. The material examined are the journals included in the SCOPUS, SAGE and EBSCO database and the peer-reviewed article, which contain in their titles, keywords or abstracts with a combination of phrases “family firms,” “family business” or “family enterprise” with “financial decision” or one of the subcategories: capital structure, investment decision, capital budgeting, working capital management or dividend policy. The study covers the period from 2000 to 2016.

Findings

Although the interest in family business research is growing rapidly, the area of financial decision making is underestimated. Despite of the fact that the vast majority of the studies into financial decisions in family firms is are focused on the capital structure, they do not give clear answers to the question of how the family businesses behave in this scope and what their true financial logic is. Additionally, the area of the investment decisions and dividend policy is rather not better left uncovered.

Research limitations/implications

The analyses enable the identification of potential avenues for future research which could be vital to make an advancement in the consolidation of the discipline.

Practical implications

The analyses ought to have a potential meaning mainly for external institutions (especially financial institutions) in better understanding of the family businesses and their point of view.

Originality/value

This paper fulfills the need of a comprehensive review of financial decision making process in family firms. It provides a literature review and bibliography for the period between 2000 and 2016 for the use of both academicians and practitioners.

Details

Journal of Family Business Management, vol. 7 no. 3
Type: Research Article
ISSN: 2043-6238

Keywords

Article
Publication date: 19 June 2017

Morten Jakobsen

The purpose of the paper is to analyse how the intensive use of non-financial performance measures and the lack of an economic reality among Danish farmers have contributed to a…

1714

Abstract

Purpose

The purpose of the paper is to analyse how the intensive use of non-financial performance measures and the lack of an economic reality among Danish farmers have contributed to a low economic performance despite high productivity. The research ambition of the paper is to contribute to a better understanding of the managerial decision-making made by family business managers, in this case farmers, and how these decisions may impact financial performance.

Design/methodology/approach

The study is based on a case study including farmers, agricultural consultants and bankers. The analysis uses pragmatic constructivism to analyse the economic reality of the farmers included and the business topos among Danish farmers.

Findings

The main finding of the paper is that the dominating non-financial performance management techniques and a historically based strong emotional emphasis on size and production volume as the main success criteria for being a good farmer have led to a neglect of economic rationality. In addition, this practice has made the farmers blind to alternative possibilities for taking advantage of the resources available. The result has been an un-economic utopian reality.

Originality/value

The paper shows how the use of non-financial performance measures can lead to prolonging of a certain reality perception that may not be economically sustainable. Small family businesses such as family farms are likely to be more exposed to such risk because such businesses are run by a set of values that include more objectives that are more dominating than the profit objective. The paper concludes that family business managers must be open towards inputs from the society around the business, because family businesses may have a tendency to create their own reality that at some point may come in conflict with society of which the family business has to co-exist within.

Details

Qualitative Research in Accounting & Management, vol. 14 no. 2
Type: Research Article
ISSN: 1176-6093

Keywords

Article
Publication date: 21 November 2016

Geoffrey Martin and Luis Gomez-Mejia

A growing volume of family firm literature has argued that the preservation of family socioemotional wealth takes precedence over the pursuit of financial goals. The purpose of…

2563

Abstract

Purpose

A growing volume of family firm literature has argued that the preservation of family socioemotional wealth takes precedence over the pursuit of financial goals. The purpose of this paper is to develop a conceptual framework that builds knowledge regarding the two-way relationship between socioemotional and financial forms of wealth, to develop a more complete theory of wealth concerns that may inform family firm decision-making.

Design/methodology/approach

The authors conceptually examine contingencies affecting the relationship between financial and socioemotional wealth (in both causal directions).

Findings

The authors predict when one form of wealth (socioemotional/financial) is likely to dominate the other (financial/socioemotional) in the family firm’s strategic decisions.

Originality/value

The paper advances knowledge on the two-way relationship between socioemotional and financial forms of wealth providing a platform for further development in the nascent field of family business research, including our understanding of family firm decisions regarding control and influence over the family business, environmental policy, altruism toward family members, R&D, accounting choices and corporate diversification.

Details

Management Research: Journal of the Iberoamerican Academy of Management, vol. 14 no. 3
Type: Research Article
ISSN: 1536-5433

Keywords

Article
Publication date: 5 November 2018

Gérard Hirigoyen and Sami Basly

The purpose of this paper is to assessthe probable influence of some of the emotional costs and returns expected by owners on their family business sale decision; and examine if…

Abstract

Purpose

The purpose of this paper is to assessthe probable influence of some of the emotional costs and returns expected by owners on their family business sale decision; and examine if the perceived economic environment during the economic and financial crisis of 2008 had an impact on the intention to sell their family business.

Design/methodology/approach

The research is based on a sample of 69 family businesses responding to a postal questionnaire survey. The empirical study is made up of a descriptive analysis of the factors influencing the intention of a family business sale and an explanatory analysis of the sale intention.

Findings

The desire for family business renewal through family generational succession is the main emotional factor lying behind the decision to continue/sell the business. Furthermore, the financial and economic crisis does not seem to be a factor that accentuates the intention to sell the family business even if firms’ financial performance has declined.

Research limitations/implications

Future research could implement a direct measure of owners’ performance thresholds and explicitly integrate the moderating role of “Perceived economic environment.”

Practical implications

By showing that continuity is a key concern for family business owners, the research invites them to effectively prepare their succession instead of postponing this strategic process given its significance in guaranteeing the survivability of the family business.

Originality/value

Executives who perceived economic conditions as very poor are less likely to consider the sale of the business in the horizon of two years than executives perceiving them as “normal.” The study confirms that in family-owned businesses, for the owner-managers and the active and serene family shareholders, the sale price does not compensate for their emotional regret evaluated through the loss of the family business’ emotional value.

Details

Journal of Small Business and Enterprise Development, vol. 26 no. 4
Type: Research Article
ISSN: 1462-6004

Keywords

Article
Publication date: 1 February 2024

Anneleen Michiels and Claudia Binz Astrachan

The primary aim is to renew academic discourse on financial education in business families. It emphasizes the need for effective financial literacy programs to foster a healthier…

213

Abstract

Purpose

The primary aim is to renew academic discourse on financial education in business families. It emphasizes the need for effective financial literacy programs to foster a healthier relationship with money, addressing both technical aspects of finance and its psychological and relational impacts among family members.

Design/methodology/approach

This perspective article explores the impact of money education within business families. It discusses the psychological effects of money education on family dynamics and decision-making in family businesses. The research draws on previous studies, surveys and practical examples to highlight the importance of financial education and its implications on family and business sustainability.

Findings

Financial education is essential in business families as it enables more meaningful discussions on money and wealth, fostering informed decisions and decreasing conflict. Yet, it is often overlooked. There is a need for academic research into effective strategies for financial education for family members and the effects of financial literacy, or its absence, on various aspects of the business and the family system. The article presents a selection of pertinent questions for future research in this domain.

Originality/value

This article contributes to the family business field by underscoring the gap in scholarly research on money education within family businesses. It advocates for comprehensive financial education strategies that balance technical knowledge with an understanding of the psychological and relational aspects of money.

Details

Journal of Family Business Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2043-6238

Keywords

Article
Publication date: 2 September 2021

Hardeep Singh Mundi, Parmjit Kaur and R.L.N. Murty

The purpose of this study is to understand the impact of the overconfidence of finance managers on the capital structure decisions of family-run businesses in the Indian scenario…

Abstract

Purpose

The purpose of this study is to understand the impact of the overconfidence of finance managers on the capital structure decisions of family-run businesses in the Indian scenario. Furthermore, this study aims to demonstrate that measurable managerial characteristics explain the capital structure decisions of managers.

Design/methodology/approach

The qualitative approach to research, which aims at understanding a given phenomenon among the experts, is followed. Semi-structured interviews are conducted with 21 overconfident finance managers of family-owned businesses. Content analysis is used to analyse the collected data regarding capital structure decisions into several themes to fully explore the issue in the Indian scenario.

Findings

In terms of preference for cash or debt, most of the responding overconfident finance managers of family-run businesses agreed that cash is the preferred source of financing over debt financing. This is due to the biased behaviour of overconfident managers, who consider lower availability of debt as a reason to prefer cash over debt financing. The present study reports that overconfident finance managers prefer short- to long-term debt financing. These managers raise certain practical issues, such as stringent debt terms and inflexible repayment schedules, that arise in relation to the long-term debt market. The study also finds that overconfident finance managers do not fully use tax savings. Respondents reported a lack of access to the debt market and a lack of expertise in capital structure decisions as factors in these capital structure decisions. In addition, the study explores various factors, such as the role of government, the Central Bank of India and industry practices, in relation to capital structure decisions. The study finds that the capital structure decisions of these overconfident finance managers are suboptimal because of the presence of overconfidence bias.

Research limitations/implications

This study gathers information from respondents who are finance managers, not top-level managers, of family businesses; the decision not to interview the higher-ranking managers is a potential limitation of the present study. Another limitation is the small number of respondents in a specific firm size. Because of these factors, the generalisability of the findings of this study will obviously be restricted.

Practical implications

The present study has several practical implications. The first is the recognition of overconfidence bias as it affects the decision-making of finance managers. Executives, especially finance executives, will benefit from the recognition of overconfidence bias and will understand how the presence of such bias impacts corporate decision-making. Managers will understand that bias leads to faulty decision-making. The study will provide indirect feedback to policymakers and regulators in terms of understanding the role of macroeconomic variables in economic decisions. The qualitative approach followed in the present study may enhance the understanding of capital structure decisions from a psychological perspective. The majority of studies in the review of literature adopt quantitative approaches; so the qualitative approach adopted here represents a methodological innovation, and it may provide a deeper understanding of the matter.

Originality/value

The existing literature includes quantitative research aimed at understanding the impact of CEO overconfidence on various corporate policies such as capital budgeting, mergers and acquisitions, dividend policy and capital structure decisions. Quantitative research into the presence of overconfidence bias among executives and its impact on corporate policies returns mixed results. To fulfil the need for studies of overconfidence bias among executives with practical implications, this study explores the presence of overconfidence bias among finance managers in family-run businesses and investigates the impact of overconfidence on capital structure decisions.

Details

Qualitative Research in Financial Markets, vol. 14 no. 3
Type: Research Article
ISSN: 1755-4179

Keywords

Book part
Publication date: 7 July 2015

Olof Brunninge and Anders Melander

In this chapter, we explore the impact of socioemotional and financial wealth on the resource management of family firms. We use MoDo, a Swedish pulp and paper firm, covering…

Abstract

In this chapter, we explore the impact of socioemotional and financial wealth on the resource management of family firms. We use MoDo, a Swedish pulp and paper firm, covering three generations of owner-managers from 1873 to 1991, to grasp the shifting emphases on socioemotional and financial wealth in the management of the company. Identifying four strategic issues of decisive importance for the development of MoDo, we analyze the organizational values that guided the management of these issues. We propose that financial and socioemotional wealth stand for two different rationalities that infuse organizational values. The MoDo case illustrates how these rationalities go hand in hand for extended periods of time, safeguarding both financial success and socioemotional endowments. However, in a situation where the rationalities are no longer in line with the development of the industry context, the conflict arising between the two rationalities may have fatal consequences for the firm in question.

Details

New Ways of Studying Emotions in Organizations
Type: Book
ISBN: 978-1-78560-220-7

Keywords

Open Access
Article
Publication date: 19 September 2023

Johannes Thaller, Stefan Mayr and Birgit Feldbauer-Durstmüller

The unique dynamics of family firms (FFs) shape the management of financial crises. Religious and secular reasons, as a defining characteristic of this type of firm, provide a…

Abstract

Purpose

The unique dynamics of family firms (FFs) shape the management of financial crises. Religious and secular reasons, as a defining characteristic of this type of firm, provide a reference system for key management decisions. This paper aims to explore the under-researched topic of differences in FFs' crisis management between religious and secular family decision-makers (FDMs), considering secularization in developed countries.

Design/methodology/approach

The paper draws on a qualitative-empirical study of 14 large FFs from the DACH region (Germany, Austria and Switzerland), through both a media analysis and semi-structured interviews with FDMs who have significant influence on key management decisions.

Findings

Despite secularization, religion continues to influence managerial decisions such as crisis management in the DACH region. The findings show that crisis management differs across religious and secular FDMs, demonstrating the substantial impact of religious and secular reasons on operational and financial measures. Thus, religious and secular reasons may partially explain the complex and ambivalent crisis management of FFs. This indicates that religion shapes FF's key management decisions in the increasingly secularized DACH region. Religious FDMs are accountable to both the firm and to God, which fosters their own personal and financial resources during crisis management.

Originality/value

This paper contributes to the existing literature by exploring the impact of religion and secularization within developed countries. Further, it offers deeper insights into FF's crisis management and is one of the first studies to assess the impact of religion and secularization on operational and financial measures. This research derives five propositions for further research and discusses a broad range of original implications for theory and practice.

Details

Journal of Family Business Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2043-6238

Keywords

Article
Publication date: 12 August 2022

Azzeddine Allioui, Badr Habba and Taib Berrada El Azizi

The purpose of this research is to study the financial, family, and cultural incidences on the investment policy of unlisted Moroccan family firms passed on to the second…

Abstract

Purpose

The purpose of this research is to study the financial, family, and cultural incidences on the investment policy of unlisted Moroccan family firms passed on to the second generation or more in times of crisis.

Design/methodology/approach

The design is based on an innovative methodological approach of contextualization in times of crisis with 20 unlisted Moroccan family firms, 3 sociologists and 2 researcher-experts in times of crisis.

Findings

This research work gives rise to a result that can be summarized through a logic of combined rationality. Explicitly, in the family business, it is necessary to combine the two effects: financial rationality in times of crisis, and the emotionality that reigns in family logic (everything that is culture, family traditions and psychological backgrounds) to make arbitrations in terms of investments.

Originality/value

Thus, the originality of this research is rooted by a field made up of transmitted Moroccan family firms. The major problems related to the investment of the family firm begin to emerge once there are a multitude of generations involved in the management. This accentuates the family and socio-cultural effects of family reputation and religiosity and the firm's strategic imitation. In this sense, this paper proposes a way forward in the research on family businesses, by integrating family and cultural logics following a hybrid approach that integrates these factors with classical financial logics.

Details

Journal of Family Business Management, vol. 13 no. 4
Type: Research Article
ISSN: 2043-6238

Keywords

1 – 10 of over 54000